In order to maintain a healthy UCC portfolio, a secured party must carefully monitor UCC lapse dates and file timely Continuation Statements when a debtor’s financial obligation extends beyond five years. It is critical that secured parties manage this process meticulously, as a lapsed filing ceases to be effective and can cost the secured party its priority position to collect.
Determining when to file a
Continuation Statement can be confusing. Here are five “need to know” facts to get you on the right track:
1. A standard UCC Financing Statement is effective for a period of five years from its date of filing.
2. Every UCC
Financing Statement has a filing date and a corresponding lapse date.
3. To extend the term of effectiveness, a secured party must file a Continuation Statement prior to a UCC’s assigned lapse date.
4. A Continuation Statement can only be filed within six months of the UCC’s lapse date; a Continuation Statement that is submitted prematurely will be rejected by the filing office.
5. A filed Continuation Statement extends the UCC’s effectiveness for an additional five years from the date that the Financing Statement would have expired, not from the filing date of the Continuation Statement.
Did you know? Every
UCC filing prepared and submitted through the CLAS
UCC eZFILE® system is automatically enrolled in free lapse date tracking. As filings approach their lapse date, users receive automated continuation alerts to remind them to take action; on-demand continuation reports allow users to view a listing of filings set to lapse up to a year in advance. Contact CLAS today to
request a free system demonstration! 800.952.5696 |
connect@clasinfo.com
